Business Taxes Law Guide – Revision 2015

Sales and Use Tax Annotations

170.0000 COLLECTION OF TAX BY BOARD

Annotation 170.0078

(a) IN GENERAL

170.0078Secured Creditor's Interest in Banked Funds. The Board's attempt to levy on a taxpayer's bank account may be thwarted by a secured creditor's claim of having a security interest in the account funds. This interest could result from the sale of collateral in which the creditor had a perfected security interest. However, the creditor's interest extends only to the portion of the proceeds traceable to the wholesale cost of the collateral. If the sale of the collateral involves the collection of sales tax reimbursement or other retailer costs and mark-up, and the funds are commingled in the bank account, the security interest of the creditor does not extend to these peripheral amounts.

A party claiming a security interest in funds upon which the Board has levied may be required to trace the funds deposited in order to show that they are the proceeds from the sale of collateral. 10/18/93.